##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 Form 10-Q
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the Quarterly Period Ended September 30, 2009
 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from      to
 Commission File Number: 000-25955
 Waste Services, Inc.
  Delaware
    
    01-0780204(State or other jurisdiction of 
incorporation or organization)
    
    (I.R.S. Employer
Identification No.)
 1122 International Blvd., Suite 601, Burlington, Ontario, Canada L7L 6Z8  (Address of principal executive offices) (Zip Code)
 (905) 319-1237  (Registrants telephone number, including area code)
 þ o
 o o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o(Do not check if a smaller reporting
company)
    
    Smaller reporting company o
 o þ




---



##### 



TABLE OF CONTENTS
 PagePART I  FINANCIAL INFORMATIONItem 1. Financial StatementsCondensed Consolidated Balance Sheets as of September 30, 2009 (unaudited) and December 31, 2008
    
    
    2Unaudited Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30,
2009 and 2008
    
    
    3Unaudited Condensed Consolidated Statement of Shareholders Equity for the Nine Months Ended September 30, 2009
    
    
    4Unaudited Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2009 and 2008
    
    
    5Notes to Unaudited Condensed Consolidated Financial Statements
    
    
    6Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    29Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    46Item 4. Controls and Procedures
    
    
    47PART II  OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    47Item 1A. Risk Factors
    
    
    47Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    47Item 3. Defaults Upon Senior Securities
    
    
    47Item 4. Submission of Matters to a Vote of Security Holders
    
    
    47Item 5. Other Information
    
    
    47Item 6. Exhibits
    
    
    48Signatures
    
    
    49EX-4.3EX-10.1EX-10.2EX-31.1EX-31.2EX-32.1
  1




---



##### Table of Contents



PART I. FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 WASTE SERVICES, INC.
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
 (In thousands, except share amounts)
 September 30,
    
    
    December 31,2009
    
    
    2008(Unaudited)ASSETSCurrent assets:Cash
    
    $
    3,209
    
    
    $
    7,227Accounts receivable (net of allowance for doubtful accounts of $639
and $631 as of September 30, 2009 and December 31, 2008, respectively)
    
    
    57,585
    
    
    
    52,062Prepaid expenses and other current assets
    
    
    9,754
    
    
    
    13,672Total current
assets
    
    
    70,548
    
    
    
    72,961Property and equipment, net
    
    
    199,540
    
    
    
    188,800Landfill sites, net
    
    
    196,349
    
    
    
    196,632Goodwill and other intangible assets, net
    
    
    393,514
    
    
    
    372,886Other assets
    
    
    10,841
    
    
    
    9,648Total assets
    
    $
    870,792
    
    
    $
    840,927LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    24,100
    
    
    $
    19,341Accrued expenses and other current liabilities
    
    
    57,220
    
    
    
    62,802Short-term financing and current portion of long-term debt
    
    
    17,750
    
    
    
    11,102Total current
liabilities
    
    
    99,070
    
    
    
    93,245Long-term debt
    
    
    355,529
    
    
    
    360,967Deferred income taxes
    
    
    38,100
    
    
    
    32,298Accrued closure, post-closure and other obligations
    
    
    21,361
    
    
    
    19,399Total liabilities
    
    
    514,060
    
    
    
    505,909Shareholders equity:Common stock $0.01 par value: 166,666,666 shares authorized, 46,253,107
and 43,985,436 shares issued and outstanding as of September 30, 2009
and December 31, 2008, respectively
    
    
    462
    
    
    
    439Additional paid-in capital
    
    
    501,200
    
    
    
    512,942Accumulated other comprehensive income
    
    
    46,102
    
    
    
    38,221Accumulated deficit
    
    
    (191,032
    )
    
    
    (216,584
    )Total shareholders equity
    
    
    356,732
    
    
    
    335,018Total liabilities and shareholders equity
    
    $
    870,792
    
    
    $
    840,927
  2




---



##### Table of Contents



WASTE SERVICES, INC.
 
 UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 (In thousands, except per share data)
 Three Months Ended September 30,
    
    
    Nine Months Ended September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Revenue
    
    $
    112,461
    
    
    $
    125,745
    
    
    $
    315,738
    
    
    $
    370,635Operating and other expenses:Cost of operations (exclusive of depreciation, depletion
and amortization)
    
    
    71,204
    
    
    
    82,512
    
    
    
    203,896
    
    
    
    242,661Selling, general and administrative expense (exclusive of
depreciation, depletion and amortization)
    
    
    13,085
    
    
    
    15,074
    
    
    
    39,034
    
    
    
    47,943Depreciation, depletion and amortization
    
    
    10,940
    
    
    
    11,503
    
    
    
    32,016
    
    
    
    34,826Loss (gain) on sale of property and equipment, foreign exchange and
other
    
    
    (7
    )
    
    
    135
    
    
    
    (2,533
    )
    
    
    (322
    )Income from operations
    
    
    17,239
    
    
    
    16,521
    
    
    
    43,325
    
    
    
    45,527Interest expense
    
    
    7,528
    
    
    
    7,730
    
    
    
    22,418
    
    
    
    25,770Change in fair value of warrants
    
    
    (688
    )
    
    
    
    
    
    
    (2,103
    )
    
    
    Income from continuing operations before income taxes
    
    
    10,399
    
    
    
    8,791
    
    
    
    23,010
    
    
    
    19,757Income tax provision
    
    
    3,682
    
    
    
    5,322
    
    
    
    8,837
    
    
    
    6,927Income from continuing operations
    
    
    6,717
    
    
    
    3,469
    
    
    
    14,173
    
    
    
    12,830Income from discontinued operations, net of income tax
provision of $266 for the nine months ended September 30, 2008
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    409Gain on sale of discontinued operations, net of income tax
provision of $4,485 for the nine months ended September 30, 2008
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,869Net income
    
    $
    6,717
    
    
    $
    3,469
    
    
    $
    14,173
    
    
    $
    20,108Basic and diluted earnings per share:Earnings per share  continuing operations
    
    $
    0.15
    
    
    $
    0.08
    
    
    $
    0.31
    
    
    $
    0.28Earnings per share  discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.16Earnings per share  basic and diluted
    
    $
    0.15
    
    
    $
    0.08
    
    
    $
    0.31
    
    
    $
    0.44Weighted average common shares outstanding  basic
    
    
    46,253
    
    
    
    46,079
    
    
    
    46,206
    
    
    
    46,076Weighted average common shares outstanding  diluted
    
    
    46,302
    
    
    
    46,088
    
    
    
    46,231
    
    
    
    46,085
  3




---



##### Table of Contents



WASTE SERVICES, INC.
 
 UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS EQUITY
 For the Nine Months Ended September 30, 2009
 (In thousands)
 AccumulatedWaste Services, Inc.
    
    
    Additional
    
    
    Other
    
    
    
    
    
    
    TotalCommon Stock
    
    
    Paid-in
    
    
    Comprehensive
    
    
    Accumulated
    
    
    ShareholdersShares
    
    
    Amount
    
    
    Capital
    
    
    Income
    
    
    Deficit
    
    
    EquityBalance, December 31, 2008, as previously
reported
    
    
    43,985
    
    
    $
    439
    
    
    $
    512,942
    
    
    $
    38,221
    
    
    $
    (216,584
    )
    
    $
    335,018Cumulative effect of reclassification of warrants
    
    
    
    
    
    
    
    
    
    
    (13,774
    )
    
    
    
    
    
    
    11,379
    
    
    
    (2,395
    )Balance, January 1, 2009, as adjusted
    
    
    43,985
    
    
    
    439
    
    
    
    499,168
    
    
    
    38,221
    
    
    
    (205,205
    )
    
    
    332,623Stock-based compensation
    
    
    172
    
    
    
    2
    
    
    
    2,053
    
    
    
    
    
    
    
    
    
    
    
    2,055Conversion of exchangeable shares
    
    
    2,096
    
    
    
    21
    
    
    
    (21
    )
    
    
    
    
    
    
    
    
    
    
    Foreign currency translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,881
    
    
    
    
    
    
    
    7,881Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14,173
    
    
    
    14,173Balance, September 30, 2009
    
    
    46,253
    
    
    $
    462
    
    
    $
    501,200
    
    
    $
    46,102
    
    
    $
    (191,032
    )
    
    $
    356,732
  4




---



##### Table of Contents



WASTE SERVICES, INC.
 
 UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 (In thousands)
 Nine Months Ended September 30,2009
    
    
    2008Cash flows from operating activities:Net income
    
    $
    14,173
    
    
    $
    20,108Adjustments to reconcile net income to net cash flows
from operating activities:Income from discontinued operations, net of income tax
    
    
    
    
    
    
    (7,278
    )Depreciation, depletion and amortization
    
    
    32,016
    
    
    
    34,826Amortization of debt issue costs and discounts
    
    
    2,593
    
    
    
    2,008Deferred income tax provision (benefit)
    
    
    3,862
    
    
    
    (1,724
    )Non-cash stock-based compensation expense
    
    
    2,055
    
    
    
    2,785Change in fair value of warrants
    
    
    (2,103
    )
    
    
    Loss (gain) on sale of property and equipment and other non-cash items
    
    
    (1,834
    )
    
    
    229Changes in operating assets and liabilities (excluding
the effects of acquisitions and dispositions):Accounts receivable
    
    
    (731
    )
    
    
    2,461Prepaid expenses and other current assets
    
    
    5,826
    
    
    
    2,851Accounts payable
    
    
    3,074
    
    
    
    (3,537
    )Accrued expenses and other current liabilities
    
    
    (11,777
    )
    
    
    (3,806
    )Net cash provided by continuing operations
    
    
    47,154
    
    
    
    48,923Net cash provided by discontinued operations
    
    
    
    
    
    
    1,163Net cash provided by operating activities
    
    
    47,154
    
    
    
    50,086Cash flows from investing activities:Cash used in business combinations
    
    
    (16,681
    )
    
    
    Capital expenditures
    
    
    (24,413
    )
    
    
    (39,220
    )Proceeds from asset sales and business divestitures
    
    
    6,862
    
    
    
    57,715Deposits for business acquisitions and other
    
    
    (529
    )
    
    
    (3,876
    )Net cash provided by (used in) continuing operations
    
    
    (34,761
    )
    
    
    14,619Net cash used in discontinued operations
    
    
    
    
    
    
    (43
    )Net cash provided by (used in) investing activities
    
    
    (34,761
    )
    
    
    14,576Cash flows from financing activities:Proceeds from Senior Subordinated Notes
    
    
    51,563
    
    
    
    Draws on revolving credit facility
    
    
    34,419
    
    
    
    Proceeds from the exercise of options and warrants
    
    
    
    
    
    
    60Principal repayments of debt and capital lease obligations
    
    
    (102,681
    )
    
    
    (43,597
    )Fees paid for financing transactions
    
    
    (1,204
    )
    
    
    Net cash used in financing activities  continuing operations
    
    
    (17,903
    )
    
    
    (43,537
    )Effect of exchange rate changes on cash
    
    
    1,492
    
    
    
    (836
    )Increase (decrease) in cash
    
    
    (4,018
    )
    
    
    20,289Cash at the beginning of the period
    
    
    7,227
    
    
    
    20,706Cash at the end of the period
    
    $
    3,209
    
    
    $
    40,995
  5




---



##### Table of Contents



WASTE SERVICES, INC.
 
 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 1. Organization of Business and Basis of Presentation
     6




---



##### Table of Contents



WASTE SERVICES, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
    2. Recently Issued Accounting Pronouncements and Adopted Accounting
   7




---



##### Table of Contents



WASTE SERVICES, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
     September 30,
    
    January 1,2009
    
    2009Annual dividend
yield
    
    
    
    
    
    
    Expected life (years)
    
    
    0.6
    
    
    
    1.4Risk-free interest
rate
    
    
    0.4
    %
    
    
    0.4
    %Expected
volatility
    
    
    63
    %
    
    
    56
    %
  8




---



##### Table of Contents



WASTE SERVICES, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  3. Fair Value Measurements
 1 2
 
    
    Level one  Quoted market prices in active markets for identical assets or liabilities;
    
    Level two  Inputs other than level one inputs that are either directly or indirectly
observable; and
    
    Level three  Unobservable inputs developed using estimates and assumptions, which are
developed by the reporting entity and reflect those assumptions that a market participant
would use.
  Level 1
    
    
    Level 2
    
    
    Level 3
    
    
    TotalAccrued closure and post-closure obligations
    
    $
    
    
    
    $
    
    
    
    $
    19,856
    
    
    $
    19,856Accrued rent relative to October 2008 restructuring
    
    
    
    
    
    
    
    
    
    
    625
    
    
    
    625Fair value of warrants
    
    
    
    
    
    
    293
    
    
    
    
    
    
    
    293$
    
    
    
    $
    293
    
    
    $
    20,481
    
    
    $
    20,774
  4. Share-Based Payments
  9




---



##### Table of Contents



WASTE SERVICES, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
    WeightedWeighted
    
    AverageAverage
    
    Remaining
    
    AggregateNumber
    
    Grant
    
    Contractual
    
    Intrinsicof Shares
    
    Value
    
    Term (Years)
    
    ValueNonvested restricted stock units -Beginning of the period
    
    
    229,158
    
    
    $
    9.02
    
    
    
    0.3
    
    
    $
    1,508Granted
    
    
    438,669
    
    
    
    4.55Vested
    
    
    (171,875
    )
    
    
    9.02Forfeited
    
    
    (3,751
    )
    
    
    5.04End of the period
    
    
    492,201
    
    
    
    5.07
    
    
    
    0.5
    
    
    $
    2,274
   Three MonthsEnded
    
    Nine Months Ended September 30,September 30, 2008
    
    2009
    
    2008Annual dividend
yield
    
    
    
    
    
    
    
    
    
    
    Weighted average expected life
(years)
    
    
    6.7
    
    
    
    7.0
    
    
    
    7.0Risk-free interest
rate
    
    
    3.8
    %
    
    
    2.6
    %
    
    
    3.2
    %Expected
volatility
    
    
    53
    %
    
    
    52
    %
    
    
    61
    %
 10




---



##### Table of Contents



WASTE SERVICES, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
    Number of
    
    Weighted Average Exercise PriceShares Issuable
    
    US$ Options
    
    C$ Options (C$)Options outstanding at the beginning of the period
    
    
    2,218,965
    
    
    $
    12.29
    
    
    $
    20.41Granted
    
    
    282,500
    
    
    
    4.33
    
    
    
    Forfeited
    
    
    (45,667
    )
    
    
    8.45
    
    
    
    Expired
    
    
    (1,328,982
    )
    
    
    14.19
    
    
    
    20.41Options outstanding at the end of the period
    
    
    1,126,816
    
    
    
    8.59
    
    
    
    Options vested or expected to vest at the end of the period
    
    
    1,029,351
    
    
    
    8.85
    
    
    
    Options exercisable at the end of the period
    
    
    752,947
    
    
    
    10.00
    
    
    
    
  5. Business Combinations
    11




---



##### Table of Contents



WASTE SERVICES, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  DisposAll
    
    
    All Others
    
    
    TotalPurchase price:Cash paid
    
    $
    14,313
    
    
    $
    2,368
    
    
    $
    16,681Deferred purchase price
    
    
    
    
    
    
    168
    
    
    
    168Other consideration
    
    
    1,250
    
    
    
    54
    
    
    
    1,304Total purchase price
    
    $
    15,563
    
    
    $
    2,590
    
    
    $
    18,153Allocated as follows:Accounts receivable
    
    $
    629
    
    
    $
    21
    
    
    $
    650Accrued expenses and other current liabilities
    
    
    (677
    )
    
    
    
    
    
    
    (677
    )Property and equipment
    
    
    3,634
    
    
    
    1,332
    
    
    
    4,966Other intangible assets
    
    
    4,163
    
    
    
    673
    
    
    
    4,836Fair value of assets acquired
    
    $
    7,749
    
    
    $
    2,026
    
    
    $
    9,775Goodwill allocation
    
    $
    7,814
    
    
    $
    564
    
    
    $
    8,378
  Weighted -AverageAmortizationAmount
    
    
    PeriodAllocated
    
    
    (Years)Customer relationships and
contracts
    
    $
    3,706
    
    
    
    3.0Non-competition agreements
    
    
    1,130
    
    
    
    5.0Total other intangible assets
acquired
    
    $
    4,836
    
    
    
    3.4
    12




---



##### Table of Contents



WASTE SERVICES, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
   Three Months
    
    
    Nine MonthsEnded
    
    
    EndedSeptember 30, 2009
    
    
    September 30, 2009Revenue
    
    $
    113,699
    
    
    $
    321,615Income from continuing operations
    
    $
    6,451
    
    
    $
    13,036Basic and diluted earnings per share  continuing operations
    
    $
    0.14
    
    
    $
    0.28Pro forma weighted average number of common shares outstanding:Basic
    
    
    46,253
    
    
    
    46,206Diluted
    
    
    46,302
    
    
    
    46,231
  Three Months
    
    
    Nine MonthsEnded
    
    
    EndedSeptember 30, 2008
    
    
    September 30, 2008Revenue
    
    $
    129,481
    
    
    $
    381,843Income from continuing operations
    
    $
    2,504
    
    
    $
    9,740Basic and diluted earnings per share  continuing operations
    
    $
    0.05
    
    
    $
    0.21Pro forma weighted average number of common shares outstanding:Basic
    
    
    46,079
    
    
    
    46,076Diluted
    
    
    46,088
    
    
    
    46,085
   13




---



##### Table of Contents



WASTE SERVICES, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 6. Discontinued Operations
   7. Prepaid Expenses and Other Current Assets
  September 30,
    
    
    December 31,2009
    
    
    2008(Unaudited)Prepaid expenses
    
    $
    4,659
    
    
    $
    9,793Parts and supplies
    
    
    1,928
    
    
    
    1,733Income taxes
receivable
    
    
    1,040
    
    
    
    563Other current assets
    
    
    2,127
    
    
    
    1,583$
    9,754
    
    
    $
    13,672
 14




---



##### Table of Contents



WASTE SERVICES, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 8. Property and Equipment
  September 30,
    
    
    December 31,2009
    
    
    2008(Unaudited)Land and buildings
    
    $
    82,005
    
    
    $
    74,497Vehicles
    
    
    155,518
    
    
    
    141,650Containers, compactors and landfill and recycling equipment
    
    
    104,472
    
    
    
    89,568Furniture, fixtures, other office equipment and leasehold improvements
    
    
    13,025
    
    
    
    11,060Total property and equipment
    
    
    355,020
    
    
    
    316,775Less: Accumulated depreciation
    
    
    (155,480
    )
    
    
    (127,975
    )Property and equipment, net
    
    $
    199,540
    
    
    $
    188,800
 9. Landfill Sites, Accrued Closure, Post-Closure and Other Obligations
 Landfill Sites
  September 30,
    
    
    December 31,2009
    
    
    2008(Unaudited)Landfill sites
    
    $
    273,565
    
    
    $
    262,732Less: Accumulated depletion
    
    
    (77,216
    )
    
    
    (66,100
    )Landfill sites, net
    
    $
    196,349
    
    
    $
    196,632
  Nine Months Ended September 30,2009
    
    
    2008Balance at the beginning of the period
    
    $
    196,632
    
    
    $
    190,451Landfill site construction costs
    
    
    3,545
    
    
    
    7,289Additional asset retirement obligations
    
    
    1,023
    
    
    
    1,284Depletion
    
    
    (6,934
    )
    
    
    (7,784
    )Purchase price adjustments for prior acquisitions
    
    
    9
    
    
    
    49Effect of foreign exchange rate fluctuations
    
    
    2,074
    
    
    
    (1,181
    )Balance at the end of the period
    
    $
    196,349
    
    
    $
    190,108
 15




---



##### Table of Contents



WASTE SERVICES, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Accrued Closure, Post-Closure and Other Obligations
  September 30,
    
    
    December 31,2009
    
    
    2008(Unaudited)Accrued closure and post-closure obligations
    
    $
    16,050
    
    
    $
    12,749Accrued restructuring and severance costs
    
    
    2,068
    
    
    
    3,624Capital lease obligations
    
    
    3
    
    
    
    568Other obligations
    
    
    3,240
    
    
    
    2,458$
    21,361
    
    
    $
    19,399
   Nine Months Ended September 30,2009
    
    
    2008Current portion at the beginning of the period
    
    $
    7,589
    
    
    $
    4,153Long-term portion at the beginning of the period
    
    
    12,749
    
    
    
    14,678Balance at the beginning of the period
    
    
    20,338
    
    
    
    18,831Additional asset retirement obligations
    
    
    1,023
    
    
    
    1,284Accretion
    
    
    477
    
    
    
    589Payments
    
    
    (3,452
    )
    
    
    (304
    )Acquisitions
    
    
    250
    
    
    
    Other additions
    
    
    150
    
    
    
    Effect of foreign exchange rate fluctuations
    
    
    1,070
    
    
    
    (627
    )Balance at the end of the period
    
    
    19,856
    
    
    
    19,773Less: Current portion
    
    
    (3,806
    )
    
    
    (5,902
    )Long-term portion
    
    $
    16,050
    
    
    $
    13,871
 16




---



##### Table of Contents



WASTE SERVICES, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 10. Goodwill and Other Intangible Assets
  September 30,
    
    
    December 31,2009
    
    
    2008(Unaudited)Other intangible assets subject to amortization:Customer relationships and contracts
    
    $
    52,725
    
    
    $
    48,997Non-competition agreements and other
    
    
    6,845
    
    
    
    5,62959,570
    
    
    
    54,626Less: Accumulated amortization:Customer relationships and contracts
    
    
    (29,735
    )
    
    
    (26,536
    )Non-competition agreements and other
    
    
    (3,122
    )
    
    
    (2,133
    )Other intangible assets subject to amortization, net
    
    
    26,713
    
    
    
    25,957Goodwill
    
    
    366,801
    
    
    
    346,929Goodwill and other intangible assets, net
    
    $
    393,514
    
    
    $
    372,886
  Nine Months Ended September 30, 2009Florida
    
    
    Canada
    
    
    TotalBalance at the beginning of the period
    
    $
    263,428
    
    
    $
    83,501
    
    
    $
    346,929Acquisitions
    
    
    8,378
    
    
    
    
    
    
    
    8,378Effect of foreign exchange rate fluctuations
    
    
    
    
    
    
    11,494
    
    
    
    11,494Balance at the end of the period
    
    $
    271,806
    
    
    $
    94,995
    
    
    $
    366,801
 Nine Months Ended September 30, 2008Florida
    
    
    Canada
    
    
    TotalBalance at the beginning of the period
    
    $
    262,338
    
    
    $
    102,603
    
    
    $
    364,941Purchase price allocation adjustments for prior acquisitions
    
    
    (104
    )
    
    
    
    
    
    
    (104
    )Effect of foreign exchange rate fluctuations
    
    
    
    
    
    
    (7,029
    )
    
    
    (7,029
    )Balance at the end of the period
    
    $
    262,234
    
    
    $
    95,574
    
    
    $
    357,808
 11. Other Assets
  September 30,
    
    
    December 31,2009
    
    
    2008(Unaudited)Debt issue costs, net of accumulated amortization of $4,485 and $3,035
as of September 30, 2009 and December 31, 2008, respectively
    
    $
    9,188
    
    
    $
    8,538Acquisition deposits
    
    
    1,129
    
    
    
    561Other assets
    
    
    524
    
    
    
    549$
    10,841
    
    
    $
    9,648
 17




---



##### Table of Contents



WASTE SERVICES, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 12. Accrued Expenses and Other Current Liabilities
  September 30,
    
    
    December 31,2009
    
    
    2008(Unaudited)Deferred revenue
    
    $
    11,900
    
    
    $
    10,980Accrued interest
    
    
    9,873
    
    
    
    3,702Accrued compensation, benefits and subcontractor costs
    
    
    6,635
    
    
    
    7,893Insurance reserves
    
    
    6,443
    
    
    
    6,505Accrued waste disposal costs
    
    
    5,930
    
    
    
    7,964Accrued closure and post-closure obligations
    
    
    3,806
    
    
    
    7,589Accrued restructuring and severance costs
    
    
    2,042
    
    
    
    3,183Accrued royalties and franchise fees
    
    
    1,795
    
    
    
    2,137Accrued capital expenditures
    
    
    1,306
    
    
    
    2,204Accrued insurance premiums
    
    
    987
    
    
    
    6,123Accrued professional fees
    
    
    798
    
    
    
    794Current portion of capital lease obligations
    
    
    693
    
    
    
    315Accrued acquisition costs
    
    
    366
    
    
    
    631Fair value of warrants
    
    
    293
    
    
    
    Other accrued expenses and current liabilities
    
    
    4,353
    
    
    
    2,782$
    57,220
    
    
    $
    62,802
 13. Debt
  September 30,
    
    
    December 31,2009
    
    
    2008(Unaudited)Credit Facilities:U.S. dollar denominated revolving credit facility, floating interest rate at
4.5% as of December 31, 2008
    
    $
    
    
    
    $
    34,600Canadian dollar denominated revolving credit facility, floating interest rate at 4.8%
and 5.3%, net of discount of nil and $56, as of September 30, 2009 and
December 31, 2008, respectively
    
    
    5,604
    
    
    
    27,699U.S. dollar denominated term loan facility, floating interest rate at 3.8%
and 4.5%, net of discount of $993 and $1,268, as of September 30, 2009 and
December 31, 2008, respectively
    
    
    36,902
    
    
    
    38,125Canadian dollar denominated term loan facility, floating interest rate at 4.0%
and 5.3%, net of discount of $3,330 and $3,668, as of September 30, 2009 and
December 31, 2008, respectively
    
    
    113,962
    
    
    
    103,505Senior Subordinated Notes, fixed interest rate at 9.5%, due 2014, net of discount
of $1,480 and $1,146 as of September 30, 2009 and December 31, 2008, respectively
    
    
    208,520
    
    
    
    158,854Other secured notes payable, interest at 4.5% to 7.8%, due through
2025, net of discount of $1,190 and $1,563 as of September 30, 2009 and
December 31, 2008, respectively
    
    
    6,058
    
    
    
    6,891Other subordinated notes payable, interest at 6.7%, due through 2017
    
    
    2,233
    
    
    
    2,395373,279
    
    
    
    372,069Less: Current portion
    
    
    (17,750
    )
    
    
    (11,102
    )Long-term portion
    
    $
    355,529
    
    
    $
    360,967
 18




---



##### Table of Contents



WASTE SERVICES, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Senior Secured Credit Facilities
   Other Secured Notes Payable
  Senior Subordinated Notes
 1 2
   19




---



##### Table of Contents



WASTE SERVICES, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  14. Commitments and Contingencies
 Environmental Risks
   Legal Proceedings
   Surety Bonds, Letters of Credit and Insurance
   20




---



##### Table of Contents



WASTE SERVICES, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  Nine Months Ended September 30,2009
    
    
    2008Balance at the beginning of the period
    
    $
    6,505
    
    
    $
    6,055Provisions
    
    
    2,801
    
    
    
    3,975Payments
    
    
    (2,542
    )
    
    
    (3,408
    )Unfavorable (favovable) claim development for prior periods
    
    
    (321
    )
    
    
    823Balance at the end of the period
    
    $
    6,443
    
    
    $
    7,445
 Disposal Agreement
   Purchase Agreement
  Office Lease
 1 2
 21




---



##### Table of Contents



WASTE SERVICES, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Other Contractual Arrangements
   Severanceand RelatedCosts
    
    
    Rent
    
    
    Consulting
    
    
    TotalBalance at the beginning of the period
    
    $
    3,238
    
    
    $
    984
    
    
    $
    812
    
    
    $
    5,034Changes in estimates and other provisions
    
    
    (86
    )
    
    
    (106
    )
    
    
    
    
    
    
    (192
    )Payments
    
    
    (1,689
    )
    
    
    (253
    )
    
    
    (187
    )
    
    
    (2,129
    )Foreign exchange and other
    
    
    171
    
    
    
    
    
    
    
    
    
    
    
    171Balance at the end of the period
    
    $
    1,634
    
    
    $
    625
    
    
    $
    625
    
    
    $
    2,884
    22




---



##### Table of Contents



WASTE SERVICES, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 15. Authorized Capital Stock and Migration Transaction
 Total Shares
  
    
    166,666,666 shares of common stock, par value 0.01 per share; and
    
    5,000,000 shares of preferred stock, par value 0.01 per share, of which 100,000
shares have been designated as Series A Preferred Stock.
 Preferred Stock
  Migration Transaction
     23




---



##### Table of Contents



WASTE SERVICES, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Warrants
  WeightedWeighted
    
    AverageNumber
    
    Average
    
    Remaining
    
    Aggregateof Shares
    
    Exercise
    
    Contractual
    
    IntrinsicIssuable
    
    Price
    
    Term (Years)
    
    ValueOutstanding at the beginning of the period
    
    
    3,317,695
    
    
    $
    9.47
    
    
    
    1.3
    
    
    $
    Expired during the period
    
    
    (513,000
    )
    
    
    12.68Outstanding at the end of the period
    
    
    2,804,695
    
    
    $
    8.88
    
    
    
    0.8
    
    
    $
    
 16. Comprehensive Income (Loss)
  Three Months Ended September 30,
    
    
    Nine Months Ended September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Net income
    
    $
    6,717
    
    
    $
    3,469
    
    
    $
    14,173
    
    
    $
    20,108Foreign currency translation adjustment
    
    
    5,261
    
    
    
    (9,275
    )
    
    
    7,881
    
    
    
    (15,306
    )Comprehensive income (loss)
    
    $
    11,978
    
    
    $
    (5,806
    )
    
    $
    22,054
    
    
    $
    4,802
 17. Segment Information
    Three Months Ended September 30, 2009Florida
    
    Canada
    
    Corporate
    
    TotalRevenue
    
    $
    50,821
    
    
    $
    61,640
    
    
    $
    
    
    
    $
    112,461Depreciation, depletion and amortization
    
    
    6,293
    
    
    
    4,424
    
    
    
    223
    
    
    
    10,940Income (loss) from operations
    
    
    9,972
    
    
    
    12,504
    
    
    
    (5,237
    )
    
    
    17,239Capital expenditures
    
    
    2,901
    
    
    
    5,051
    
    
    
    114
    
    
    
    8,066
 24




---



##### Table of Contents



WASTE SERVICES, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Three Months Ended September 30, 2008Florida
    
    Canada
    
    Corporate
    
    TotalRevenue
    
    $
    58,468
    
    
    $
    67,277
    
    
    $
    
    
    
    $
    125,745Depreciation, depletion and amortization
    
    
    6,482
    
    
    
    4,714
    
    
    
    307
    
    
    
    11,503Income (loss) from operations
    
    
    9,347
    
    
    
    13,035
    
    
    
    (5,861
    )
    
    
    16,521Capital expenditures
    
    
    8,971
    
    
    
    9,688
    
    
    
    162
    
    
    
    18,821
 Nine Months Ended September 30, 2009Florida
    
    Canada
    
    Corporate
    
    TotalRevenue
    
    $
    151,801
    
    
    $
    163,937
    
    
    $
    
    
    
    $
    315,738Depreciation, depletion and amortization
    
    
    18,973
    
    
    
    12,362
    
    
    
    681
    
    
    
    32,016Income (loss) from operations
    
    
    29,053
    
    
    
    29,700
    
    
    
    (15,428
    )
    
    
    43,325Capital expenditures
    
    
    11,132
    
    
    
    12,915
    
    
    
    366
    
    
    
    24,413
 Nine Months Ended September 30, 2008Florida
    
    Canada
    
    Corporate
    
    TotalRevenue
    
    $
    179,331
    
    
    $
    191,304
    
    
    $
    
    
    
    $
    370,635Depreciation, depletion and amortization
    
    
    19,828
    
    
    
    13,995
    
    
    
    1,003
    
    
    
    34,826Income (loss) from operations
    
    
    29,651
    
    
    
    35,885
    
    
    
    (20,009
    )
    
    
    45,527Capital expenditures
    
    
    16,472
    
    
    
    22,180
    
    
    
    568
    
    
    
    39,220
 18. Condensed Consolidating Financial Statements
  25




---



##### Table of Contents



WASTE SERVICES, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  Three Months Ended September 30, 2008Non-Parent
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedRevenue
    
    $
    
    
    
    $
    58,468
    
    
    $
    67,277
    
    
    $
    
    
    
    $
    125,745Operating and other expenses:Cost of operations (exclusive of depreciation,
depletion and amortization)
    
    
    
    
    
    
    38,114
    
    
    
    44,398
    
    
    
    
    
    
    
    82,512Selling, general and administrative expense (exclusive
of depreciation, depletion and amortization)
    
    
    3,142
    
    
    
    4,505
    
    
    
    7,427
    
    
    
    
    
    
    
    15,074Depreciation, depletion and amortization
    
    
    27
    
    
    
    6,482
    
    
    
    4,994
    
    
    
    
    
    
    
    11,503Foreign exchange gain and other
    
    
    
    
    
    
    20
    
    
    
    115
    
    
    
    
    
    
    
    135Equity earnings in investees, net of tax
    
    
    (14,297
    )
    
    
    
    
    
    
    
    
    
    
    14,297
    
    
    
    Income from operations
    
    
    11,128
    
    
    
    9,347
    
    
    
    10,343
    
    
    
    (14,297
    )
    
    
    16,521Interest expense
    
    
    7,659
    
    
    
    42
    
    
    
    29
    
    
    
    
    
    
    
    7,730Income from continuing operations
before income taxes
    
    
    3,469
    
    
    
    9,305
    
    
    
    10,314
    
    
    
    (14,297
    )
    
    
    8,791Income tax provision
    
    
    
    
    
    
    1,739
    
    
    
    3,583
    
    
    
    
    
    
    
    5,322Net income
    
    $
    3,469
    
    
    $
    7,566
    
    
    $
    6,731
    
    
    $
    (14,297
    )
    
    $
    3,469
 26




---



##### Table of Contents



WASTE SERVICES, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Nine Months Ended September 30, 2008Non-Parent
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedRevenue
    
    $
    
    
    
    $
    179,331
    
    
    $
    191,304
    
    
    $
    
    
    
    $
    370,635Operating and other expenses:Cost of operations (exclusive of depreciation,
depletion and amortization)
    
    
    
    
    
    
    116,497
    
    
    
    126,164
    
    
    
    
    
    
    
    242,661Selling, general and administrative expense (exclusive
of depreciation, depletion and amortization)
    
    
    10,236
    
    
    
    13,819
    
    
    
    23,888
    
    
    
    
    
    
    
    47,943Depreciation, depletion and amortization
    
    
    75
    
    
    
    19,828
    
    
    
    14,923
    
    
    
    
    
    
    
    34,826Foreign exchange loss (gain) and other
    
    
    1
    
    
    
    (464
    )
    
    
    141
    
    
    
    
    
    
    
    (322
    )Equity earnings in investees, net of tax
    
    
    (55,902
    )
    
    
    
    
    
    
    
    
    
    
    55,902
    
    
    
    Income from operations
    
    
    45,590
    
    
    
    29,651
    
    
    
    26,188
    
    
    
    (55,902
    )
    
    
    45,527Interest expense
    
    
    25,482
    
    
    
    134
    
    
    
    154
    
    
    
    
    
    
    
    25,770Income from continuing operations
before income taxes
    
    
    20,108
    
    
    
    29,517
    
    
    
    26,034
    
    
    
    (55,902
    )
    
    
    19,757Income tax provision (benefit)
    
    
    
    
    
    
    (1,944
    )
    
    
    8,871
    
    
    
    
    
    
    
    6,927Net income from continuing operations
    
    
    20,108
    
    
    
    31,461
    
    
    
    17,163
    
    
    
    (55,902
    )
    
    
    12,830Net income from discontinued operations,
net of income tax provision of $266
    
    
    
    
    
    
    409
    
    
    
    
    
    
    
    
    
    
    
    409Gain on sale of discontinued operations,
net of income tax provision of $4,485
    
    
    
    
    
    
    6,869
    
    
    
    
    
    
    
    
    
    
    
    6,869Net income
    
    $
    20,108
    
    
    $
    38,739
    
    
    $
    17,163
    
    
    $
    (55,902
    )
    
    $
    20,108
 27




---



##### Table of Contents



WASTE SERVICES, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Nine Months Ended September 30, 2008Non-Parent
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedNet cash provided by (used in) operating activities
    
    $
    (17,164
    )
    
    $
    43,426
    
    
    $
    23,824
    
    
    $
    
    
    
    $
    50,086Cash flows from investing activities:Capital expenditures
    
    
    (61
    )
    
    
    (16,472
    )
    
    
    (22,687
    )
    
    
    
    
    
    
    (39,220
    )Proceeds from asset sales and business divestitures
    
    
    10
    
    
    
    57,576
    
    
    
    129
    
    
    
    
    
    
    
    57,715Deposits for business acquisitions and other
    
    
    (3,827
    )
    
    
    
    
    
    
    (49
    )
    
    
    
    
    
    
    (3,876
    )Intercompany
    
    
    83,640
    
    
    
    
    
    
    
    
    
    
    
    (83,640
    )
    
    
    Net cash provided by (used in) continuing operations
    
    
    79,762
    
    
    
    41,104
    
    
    
    (22,607
    )
    
    
    (83,640
    )
    
    
    14,619Net cash used in discontinued operations
    
    
    
    
    
    
    (43
    )
    
    
    
    
    
    
    
    
    
    
    (43
    )Net cash provided by (used in) investing activities
    
    
    79,762
    
    
    
    41,061
    
    
    
    (22,607
    )
    
    
    (83,640
    )
    
    
    14,576Cash flows from financing activities:Principal repayments of debt and capital lease obligations
    
    
    (43,447
    )
    
    
    (150
    )
    
    
    
    
    
    
    
    
    
    
    (43,597
    )Proceeds from the exercise of options and warrants
    
    
    60
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    60Intercompany
    
    
    
    
    
    
    (84,523
    )
    
    
    883
    
    
    
    83,640
    
    
    
    Net cash provided by (used in) financing
activities  continuing operations
    
    
    (43,387
    )
    
    
    (84,673
    )
    
    
    883
    
    
    
    83,640
    
    
    
    (43,537
    )Effect of exchange rate changes
on cash and cash equivalents
    
    
    
    
    
    
    
    
    
    
    (836
    )
    
    
    
    
    
    
    (836
    )Increase (decrease) in cash
    
    
    19,211
    
    
    
    (186
    )
    
    
    1,264
    
    
    
    
    
    
    
    20,289Cash at the beginning of the period
    
    
    9,080
    
    
    
    239
    
    
    
    11,387
    
    
    
    
    
    
    
    20,706Cash at the end of the period
    
    $
    28,291
    
    
    $
    53
    
    
    $
    12,651
    
    
    $
    
    
    
    $
    40,995
 28




---



##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
  Overview
  Sources of Revenue
       29




---



##### Table of Contents



Expense Structure
       Recent Developments
 Acquisitions and Dispositions
    30




---



##### Table of Contents



31




---



##### Table of Contents



Goodwill
    
    
    The fact that, to a significant extent, our shares are held by insiders and affiliates,
reducing market liquidity.
    
    One of our larger shareholders, due to circumstances unrelated to us, is liquidating their
position putting pressure on the market price of our shares.
    
    We believe that in general, the market continues to discount the value of common equity,
believing that current leverage ratios are not sustainable and companies will be required to
refinance debt at higher rates and / or issue additional equity thereby diluting current
shareholders. However, as a result of the October 2008 refinancing of our Senior Secured
Credit Facilities and September 2009 additional private placement of $50.0 million aggregate
principal of our Senior Subordinated Notes, we believe our capital structure to be stable,
but such stability is not reflected in our share price.
  32




---



##### Table of Contents



Results of Operations for the Three and Nine Months Ended September 30, 2009 and 2008
   As of:September 30,
2009
    
    $
    0.9340December 31,
2008
    
    
    0.8210For the three months ended:September 30,
2009
    
    $
    0.9107September 30,
2008
    
    
    0.9606For the nine months ended:September 30,
2009
    
    $
    0.8548September 30,
2008
    
    
    0.9818
 33




---



##### Table of Contents



Three Months Ended September 30, 2009Florida
    
    
    Canada
    
    
    TotalRevenue
    
    $
    50,821
    
    
    
    100.0
    %
    
    $
    61,640
    
    
    
    100.0
    %
    
    $
    112,461
    
    
    
    100.0
    %Operating expenses:Cost of
operations
    
    
    30,833
    
    
    
    60.7
    %
    
    
    40,371
    
    
    
    65.5
    %
    
    
    71,204
    
    
    
    63.3
    %Selling, general and administrative
expense
    
    
    6,155
    
    
    
    12.1
    %
    
    
    6,930
    
    
    
    11.2
    %
    
    
    13,085
    
    
    
    11.6
    %Depreciation, depletion and
amortization
    
    
    6,317
    
    
    
    12.4
    %
    
    
    4,623
    
    
    
    7.5
    %
    
    
    10,940
    
    
    
    9.8
    %Loss (gain) on sale of property and equipment,
foreign exchange and
other
    
    
    (76
    )
    
    
    -0.1
    %
    
    
    69
    
    
    
    0.1
    %
    
    
    (7
    )
    
    
    0.0
    %Income from
operations
    
    $
    7,592
    
    
    
    14.9
    %
    
    $
    9,647
    
    
    
    15.7
    %
    
    $
    17,239
    
    
    
    15.3
    %
 Three Months Ended September 30, 2008Florida
    
    
    Canada
    
    
    TotalRevenue
    
    $
    58,468
    
    
    
    100.0
    %
    
    $
    67,277
    
    
    
    100.0
    %
    
    $
    125,745
    
    
    
    100.0
    %Operating expenses:Cost of
operations
    
    
    38,114
    
    
    
    65.2
    %
    
    
    44,398
    
    
    
    66.0
    %
    
    
    82,512
    
    
    
    65.6
    %Selling, general and administrative
expense
    
    
    7,647
    
    
    
    13.1
    %
    
    
    7,427
    
    
    
    11.0
    %
    
    
    15,074
    
    
    
    12.0
    %Depreciation, depletion and
amortization
    
    
    6,509
    
    
    
    11.1
    %
    
    
    4,994
    
    
    
    7.4
    %
    
    
    11,503
    
    
    
    9.1
    %Loss on sale of property and equipment,
foreign exchange and
other
    
    
    20
    
    
    
    0.0
    %
    
    
    115
    
    
    
    0.2
    %
    
    
    135
    
    
    
    0.2
    %Income from
operations
    
    $
    6,178
    
    
    
    10.6
    %
    
    $
    10,343
    
    
    
    15.4
    %
    
    $
    16,521
    
    
    
    13.1
    %
 Nine Months Ended September 30, 2009Florida
    
    
    Canada
    
    
    TotalRevenue
    
    $
    151,801
    
    
    
    100.0
    %
    
    $
    163,937
    
    
    
    100.0
    %
    
    $
    315,738
    
    
    
    100.0
    %Operating expenses:Cost of
operations
    
    
    94,348
    
    
    
    62.2
    %
    
    
    109,548
    
    
    
    66.8
    %
    
    
    203,896
    
    
    
    64.6
    %Selling, general and administrative
expense
    
    
    18,922
    
    
    
    12.5
    %
    
    
    20,112
    
    
    
    12.3
    %
    
    
    39,034
    
    
    
    12.4
    %Depreciation, depletion and
amortization
    
    
    19,039
    
    
    
    12.5
    %
    
    
    12,977
    
    
    
    7.9
    %
    
    
    32,016
    
    
    
    10.1
    %Gain on sale of property and equipment,
foreign exchange and
other
    
    
    (2,273
    )
    
    
    -1.5
    %
    
    
    (260
    )
    
    
    -0.2
    %
    
    
    (2,533
    )
    
    
    -0.8
    %Income from
operations
    
    $
    21,765
    
    
    
    14.3
    %
    
    $
    21,560
    
    
    
    13.2
    %
    
    $
    43,325
    
    
    
    13.7
    %
 Nine Months Ended September 30, 2008Florida
    
    
    Canada
    
    
    TotalRevenue
    
    $
    179,331
    
    
    
    100.0
    %
    
    $
    191,304
    
    
    
    100.0
    %
    
    $
    370,635
    
    
    
    100.0
    %Operating expenses:Cost of
operations
    
    
    116,497
    
    
    
    65.0
    %
    
    
    126,164
    
    
    
    65.9
    %
    
    
    242,661
    
    
    
    65.5
    %Selling, general and administrative
expense
    
    
    24,055
    
    
    
    13.4
    %
    
    
    23,888
    
    
    
    12.5
    %
    
    
    47,943
    
    
    
    12.9
    %Depreciation, depletion and
amortization
    
    
    19,903
    
    
    
    11.1
    %
    
    
    14,923
    
    
    
    7.8
    %
    
    
    34,826
    
    
    
    9.4
    %Loss (gain) on sale of property and equipment,
foreign exchange and
other
    
    
    (463
    )
    
    
    -0.3
    %
    
    
    141
    
    
    
    0.1
    %
    
    
    (322
    )
    
    
    -0.1
    %Income from
operations
    
    $
    19,339
    
    
    
    10.8
    %
    
    $
    26,188
    
    
    
    13.7
    %
    
    $
    45,527
    
    
    
    12.3
    %
 34




---



##### Table of Contents



Revenue
  Three Months Ended September 30,
    
    
    Nine Months Ended September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Collection
    
    $
    93,566
    
    
    
    74.3
    %
    
    $
    102,284
    
    
    
    73.7
    %
    
    $
    266,297
    
    
    
    75.6
    %
    
    $
    303,654
    
    
    
    74.2
    %Landfill
disposal
    
    
    11,205
    
    
    
    8.9
    %
    
    
    12,818
    
    
    
    9.2
    %
    
    
    31,691
    
    
    
    9.0
    %
    
    
    37,404
    
    
    
    9.1
    %Transfer station
    
    
    17,718
    
    
    
    14.1
    %
    
    
    17,676
    
    
    
    12.7
    %
    
    
    46,496
    
    
    
    13.2
    %
    
    
    50,243
    
    
    
    12.3
    %Material recovery
facilities
    
    
    3,067
    
    
    
    2.4
    %
    
    
    5,302
    
    
    
    3.8
    %
    
    
    6,709
    
    
    
    1.9
    %
    
    
    16,695
    
    
    
    4.1
    %Other specialized
services
    
    
    457
    
    
    
    0.3
    %
    
    
    651
    
    
    
    0.6
    %
    
    
    903
    
    
    
    0.3
    %
    
    
    1,475
    
    
    
    0.3
    %126,013
    
    
    
    100.0
    %
    
    
    138,731
    
    
    
    100.0
    %
    
    
    352,096
    
    
    
    100.0
    %
    
    
    409,471
    
    
    
    100.0
    %Intercompany
elimination
    
    
    (13,552
    )
    
    
    
    
    
    
    (12,986
    )
    
    
    
    
    
    
    (36,358
    )
    
    
    
    
    
    
    (38,836
    )$
    112,461
    
    
    
    
    
    
    $
    125,745
    
    
    
    
    
    
    $
    315,738
    
    
    
    
    
    
    $
    370,635
     35




---



##### Table of Contents



Cost of Operations
       Selling, General and Administrative Expense
  36




---



##### Table of Contents



Depreciation, Depletion and Amortization
   Loss (Gain) on Sale of Property and Equipment, Foreign Exchange and Other
   37




---



##### Table of Contents



Interest Expense
  Three Months Ended September 30,
    
    
    Nine Months Ended September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Senior Secured Credit
Facilities
    
    $
    2,116
    
    
    $
    2,990
    
    
    $
    6,528
    
    
    $
    10,925Senior Subordinated
Notes
    
    
    3,932
    
    
    
    3,800
    
    
    
    11,532
    
    
    
    11,400Amortization of debt issue costs and
discounts
    
    
    896
    
    
    
    492
    
    
    
    2,593
    
    
    
    2,008Other interest expense
    
    
    584
    
    
    
    448
    
    
    
    1,765
    
    
    
    1,437$
    7,528
    
    
    $
    7,730
    
    
    $
    22,418
    
    
    $
    25,770
     Change in Fair Value of Warrants
  38




---



##### Table of Contents



Income Tax Provision (Benefit)
     39




---



##### Table of Contents



Liquidity and Capital Resources
  Senior Secured Credit Facilities
   Maximum
    
    Maximum
    
    MinimumConsolidated
    
    Consolidated
    
    ConsolidatedLeverage
    
    Senior Secured
    
    InterestRatio
    
    Leverage Ratio
    
    Coverage RatioThird quarter -
2009
    
    
    4.25 : 1.00
    
    
    
    2.75 : 1.00
    
    
    
    2.75 : 1.00Fourth quarter -
2009
    
    
    4.25 : 1.00
    
    
    
    2.75 : 1.00
    
    
    
    2.75 : 1.00First quarter -
2010
    
    
    4.25 : 1.00
    
    
    
    2.75 : 1.00
    
    
    
    2.75 : 1.00Second quarter -
2010
    
    
    4.25 : 1.00
    
    
    
    2.75 : 1.00
    
    
    
    2.75 : 1.00Third quarter -
2010
    
    
    4.00 : 1.00
    
    
    
    2.75 : 1.00
    
    
    
    2.75 : 1.00
  Other Secured Notes Payable
  40




---



##### Table of Contents



Senior Subordinated Notes
 1 2
    Surety Bonds, Letters of Credit and Insurance
   41




---



##### Table of Contents



Cash Flows
  Cash Flows from Operating Activities
  Cash Flows from Investing Activities
  Cash Flows from Financing Activities
  Cash Flow from Discontinued Operations
  42




---



##### Table of Contents



Off-Balance Sheet Financing
  Landfill Sites
  Balance,
    
    
    
    
    
    Changes in
    
    
    
    
    
    Balance,Beginning
    
    Landfills
    
    Engineering
    
    Airspace
    
    Endof Period
    
    Expanded
    
    Estimates
    
    Consumed
    
    of PeriodUnited StatesPermitted
capacity
    
    
    80,025
    
    
    
    
    
    
    
    
    
    
    
    (1,456
    )
    
    
    78,569Probable expansion
capacity
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total available
airspace
    
    
    80,025
    
    
    
    
    
    
    
    
    
    
    
    (1,456
    )
    
    
    78,569Number of
sites
    
    
    4
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4CanadaPermitted
capacity
    
    
    11,018
    
    
    
    4,709
    
    
    
    
    
    
    
    (353
    )
    
    
    15,374Probable expansion
capacity
    
    
    4,852
    
    
    
    (4,709
    )
    
    
    (143
    )
    
    
    
    
    
    
    Total available
airspace
    
    
    15,870
    
    
    
    
    
    
    
    (143
    )
    
    
    (353
    )
    
    
    15,374Number of
sites
    
    
    3
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3TotalPermitted
capacity
    
    
    91,043
    
    
    
    4,709
    
    
    
    
    
    
    
    (1,809
    )
    
    
    93,943Probable expansion
capacity
    
    
    4,852
    
    
    
    (4,709
    )
    
    
    (143
    )
    
    
    
    
    
    
    Total available
airspace
    
    
    95,895
    
    
    
    
    
    
    
    (143
    )
    
    
    (1,809
    )
    
    
    93,943Number of
sites
    
    
    7
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7
  43




---



##### Table of Contents



Trend Information
 Seasonality
  
    
    Less solid waste is generated during the late fall, winter and early spring because of
decreased construction and demolition activity.
    
    Certain operating costs are higher in the winter months because winter weather conditions
slow waste collection activities, resulting in higher labor costs, and rain and snow
increase the weight of collected waste, resulting in higher disposal costs, which are
calculated on a per ton basis.
    
    During the summer months, there are more tourists and part-time residents in some of our
service areas, resulting in more residential and commercial collection.
  New Accounting Pronouncements
   44




---



##### Table of Contents



Disclosure Regarding Forward-Looking Statements and Factors Affecting Future Results
   
    
    our substantial indebtedness and the significant restrictive covenants in our various
credit facilities and our ability to finance acquisitions and / or capital expenditures with
cash on hand, debt or equity offerings;
    
    our ability to pay principal debt amounts due at maturity;
    
    our business is capital intensive and may consume cash in excess of cash flow from
operations and borrowings;
    
    our ability to vertically integrate our operations;
    
    our ability to maintain and perform our financial assurance obligations;
    
    changes in regulations affecting our business and costs of compliance;
    
    revocation of existing permits and licenses or the refusal to renew or grant new permits
and licenses, which are required to enable us to operate our business or implement our
growth strategy;
    
    our domestic operations are concentrated in Florida, which may be subject to specific
economic conditions that vary from those nationally as well as weather related events that
may impact our operations;
    
    construction, equipment delivery or permitting delays for our transfer stations or
landfills;
 45




---



##### Table of Contents




    
    our ability to successfully implement our corporate strategy and integrate any
acquisitions we undertake;
    
    our ability to negotiate renewals of existing service agreements at favorable rates;
    
    our ability to enhance profitability of certain aspects of our operations in markets
where we are not internalized through either divestiture or asset swaps;
    
    costs and risks associated with litigation; and
    
    changes in general business and economic conditions, commodity pricing, exchange rates,
the financial markets and accounting standards or pronouncements.
  
 Item 3. Quantitative and Qualitative Disclosures About Market Risk
    46




---



##### Table of Contents



Item 4. Controls and Procedures
 Disclosure Controls and Procedures
  Changes in Internal Controls Over Financial Reporting
  
 PART II. OTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk Factors
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
  
 Item 3. Defaults Upon Senior Securities
  
 Item 4. Submission of Matters to a Vote of Security Holders
  
 Item 5. Other Information
  47




---



##### Table of Contents



Item 6. Exhibits
 Exhibit 4.1
    
    Supplemental Indenture dated as of January 5, 2007 to the Notes Indenture among SLD
Landfill, Inc., Pro Disposal, Inc., Waste Services, Inc., the other guarantors and
Wells Fargo Bank, National Association, as Trustee (Incorporated by reference to
Exhibit 4.16 to Form 10-K (000-29555) filed March 5, 2007).Exhibit 4.2
    
    Supplemental Indenture, dated as of April 12, 2007, among Freedom Recycling Holdings,
U.S.A. Recycling Holdings L.L.C., U.S.A. Recycling L.L.C., Waste Services, Inc., the
other guarantors and Wells Fargo Bank, National Association, as Trustee (Incorporated
by reference to Exhibit 4.1 to Form 10-Q (000-29555) filed July 26, 2007).Exhibit 4.3
    
    Supplemental Indenture, dated as of December 30, 2008, among RIP, Inc., Waste
Services, Inc., the other guarantors and Wells Fargo Bank, National Association, as
Trustee.Exhibit 10.1
    
    Separation Agreement with Charles Wilcox.Exhibit 10.2
    
    Credit Agreement dated as of October 8, 2008 among Waste Services, Inc., Waste
Services (CA) Inc., the several lenders from time to time party hereto, Barclays
Capital and Banc of America Securities, LLC as Joint Lead Arrangers and Joint Lead
Bookrunners, Bank of America, NA as Syndication Agent, Bosic Inc., Suntrust Bank and
The Bank of Nova Scotia as Co-documentation Agents and The Bank of Nova Scotia as
Canadian Agent and Canadian Collateral Agent.Exhibit 10.3
    
    First Amendment to Credit Agreement and First Amendment to Guarantee and US
Collateral Agreement, dated as of September 1, 2009, among Waste Services (CA), Inc.,
Waste Services, Inc., the Subsidiaries of the Borrowers, and Barclays Banks Plc, as
administrative agent for the Lenders (Incorporated by reference to Exhibit 20.1 to
Form 8-K (000-29555) filed September 16, 2009).Exhibit 31.1
    
    Section 302 Certification of David Sutherland-Yoest, Chief Executive Officer.Exhibit 31.2
    
    Section 302 Certification of Edwin D. Johnson, Chief Financial Officer.Exhibit 32.1
    
    Section 1350 Certification of the Chief Executive Officer and Chief Financial Officer.
 48




---



##### Table of Contents



SIGNATURES
  Date: October 29, 2009
    

    WASTE SERVICES, INC.By:
    /s/ DAVID SUTHERLAND-YOESTDavid Sutherland-YoestPresident and Chief Executive OfficerBy:
    /s/ EDWIN D. JOHNSONEdwin D. JohnsonExecutive Vice President, Chief Financial Officer 49




---



##### Table of Contents



EXHIBIT INDEX
 Exhibit No
    
    DescriptionExhibit 4.1
    
    Supplemental Indenture dated as of January 5, 2007 to the Notes Indenture among SLD
Landfill, Inc., Pro Disposal, Inc., Waste Services, Inc., the other guarantors and
Wells Fargo Bank, National Association, as Trustee (Incorporated by reference to
Exhibit 4.16 to Form 10-K (000-29555) filed March 5, 2007).Exhibit 4.2
    
    Supplemental Indenture, dated as of April 12, 2007, among Freedom Recycling Holdings,
U.S.A. Recycling Holdings L.L.C., U.S.A. Recycling L.L.C., Waste Services, Inc., the
other guarantors and Wells Fargo Bank, National Association, as Trustee (Incorporated
by reference to Exhibit 4.1 to Form 10-Q (000-29555) filed July 26, 2007).Exhibit 4.3
    
    Supplemental Indenture, dated as of December 30, 2008, among RIP, Inc., Waste
Services, Inc., the other guarantors and Wells Fargo Bank, National Association, as
Trustee.Exhibit 10.1
    
    Separation Agreement with Charles Wilcox.Exhibit 10.2
    
    Credit Agreement dated as of October 8, 2008 among Waste Services, Inc., Waste
Services (CA) Inc., the several lenders from time to time party hereto, Barclays
Capital and Banc of America Securities, LLC as Joint Lead Arrangers and Joint Lead
Bookrunners, Bank of America, NA as Syndication Agent, Bosic Inc., Suntrust Bank and
The Bank of Nova Scotia as Co-documentation Agents and The Bank of Nova Scotia as
Canadian Agent and Canadian Collateral Agent.Exhibit 10.3
    
    First Amendment to Credit Agreement and First Amendment to Guarantee and US
Collateral Agreement, dated as of September 1, 2009, among Waste Services (CA), Inc.,
Waste Services, Inc., the Subsidiaries of the Borrowers, and Barclays Banks Plc, as
administrative agent for the Lenders (Incorporated by reference to Exhibit 20.1 to
Form 8-K (000-29555) filed September 16, 2009).Exhibit 31.1
    
    Section 302 Certification of David Sutherland-Yoest, Chief Executive Officer.Exhibit 31.2
    
    Section 302 Certification of Edwin D. Johnson, Chief Financial Officer.Exhibit 32.1
    
    Section 1350 Certification of the Chief Executive Officer and Chief Financial Officer.
 50